Marketing on a Budget: Motivating customers to spread the word

For a fledgling start-up on a tight budget, or an SME with limited funds, it is easy to cite your company’s suppressive lack of cash as the core reason you have been unable to penetrate the market. However, the uncomfortable truth is, provided your product is as good as you think it is, there is always a way to get your voice heard and your goods in front of its target audience.
Often the simplest, quickest, and most cost effective way to do this, particularly for consumer-faced products, is to create a referral scheme, and let your satisfied customers spread the good word for you. This way you can capture early sales while nurturing brand advocates that will prove invaluable as your enterprise grows.
The allure of the bait you use to catch your customers, and at what point during the referral process you distribute the ‘carrot’, will determine how successful your referral scheme will be. Ultimately, you need to offer some degree of added value or discount to motivate your customers to refer your product to their friends. Ideally, you will offer the referred an incentive too.
As strategies go the referral scheme is nothing new or elaborate, but it is frequently successful. Two companies currently executing near perfect referral schemes are graze and BrandAlley.
The latter, BrandAlley, a non-stop online designer sale outlet, offer users a £10 voucher each time they invite their friends to sign up. Their friends get a tenner too, but both parties only receive this incentive when the referred makes their first online purchase. Health food snack-box pioneers graze, meanwhile, offer a similar deal. Only this time the friends you refer get a free snack box (proving there is such as thing as a free lunch) and you get a discount off your next order.
Each scheme is simple to implement, easy to understand, and worthwhile for the consumer. And both have helped the aforementioned companies penetrate their market without the need to spend a fortune on advertising. Instead, they have relied on the quality of their product and service, and the willingness of their (happy) customers to market their wares for them. 
After all, a personal referral/recommendation from a friend is considerably more powerful than an ad placed in a glossy magazine. And while an ad will run once, and may cost thousands, a referral scheme can be executed cheaply and run for weeks, months, or even years. What’s more, it will allow you to capture your customer’s data, so you can keep them up to date with news, promotions and offers with a monthly mail shot.
Now, as it was me that referred the idea of a referral scheme, I would like you all to send me £10 and a snack box. Many thanks.
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